Liberty files suit against MarAd over MSP program

Thursday, January 24, 2013

Liberty Maritime Corp. on Wednesday filed a lawsuit in the U.S. District Court for the Eastern District District of New York accusing the Maritime Administration and U.S. Department of Transportation with improperly administering the Maritime Security Program (MSP), one of the chief programs to support the U.S. Merchant Marine.
"MarAd has failed in its responsibility to distinguish between actual U.S. citizen companies and entities masquerading as U.S. citizens for the purpose of conveying the benefits of MSP to foreign companies," said Philip Shapiro, president and chief executive officer of Liberty.
Liberty has a single roll-on/roll-off ship in MSP, which provides an annual $3.1 million-per-ship subsidy to U.S.-flag shipping companies operating in international trades to help offset the higher cost of operating under the U.S. flag. Liberty said MarAd acted unlawfully by approving two transfers of MSP-operating agreements to foreign-controlled companies and as a result it was denied the opportunity to be awarded one of the transferred MSP-operating agreements.
The companies that own two of its ro/ro ships, Liberty Pride and Liberty Promise, are plaintiffs in the suit.
Sixty ships receive support under MSP, but as Rep. Tim Bishop, D-N.Y., said at a hearing of the House Subcommittee on Coast Guard and Maritime Transport last year "my understanding that 49 of the 60 maritime security program contracts are controlled by foreign companies and it is my further understanding that this is clearly at odds with congressional intent.”
Liberty also alleges "MarAd unlawfully departed from open and transparent program administration from 1996-2005 and has conducted all MSP business in secret since then contributing to the several alleged Administration errors."
Liberty noted its lawsuit "is particularly relevant because MSP was recently amended by Congress, and MarAd is in the process of preparing offers to existing contractors."
It said "at least two of those contractors should be ineligible for new contracts because they are under non-citizen control and because they otherwise should have been found to be ineligible for MSP."
Liberty also said MarAd has failed to provide it documents under the Freedom of Information Act (FOIA) or heavily redacted them. For example, it said on Sept. 30, 2012, when MarAd released 736 pages in response to a FOIA request, 611 were completely blank and only 29 of the remaining 125 "had anything more than a document title caption." - Chris Dupin